FTSE 100 rebounds on commodity and banking stocks boost
Commodity and banking stocks helped the FTSE 100 rebound on Tuesday after surging coronavirus cases and fears of an economic slowdown pushed the index to a two-month low in the previous session.
- United Kingdom
Commodity and banking stocks helped the FTSE 100 rebound on Tuesday after surging coronavirus cases and fears of an economic slowdown pushed the index to a two-month low in the previous session. The FTSE 100 gained 1% with HSBC Holdings, BP, and Rio Tinto being the top boosts. The base metal miners sub-index was the top gainer, rising 1.8%.
Banks jumped 1.3% after Catherine Mann, a top economist who will soon join the Bank of England's rate-setting committee, joined interest-rate setter Jonathan Haskel to say cutting stimulus support too early was not the right option. A recent jump in inflation above the BoE's 2% target since May had raised worries over the central bank pulling back support sooner than expected.
Two BoE monetary policy members last week said the time might be nearing for the BoE to rein in its huge stimulus program. "Another potential economic slowdown due to the virus, now combined with surging inflation, maybe a big headache for policymakers," said Charalambos Pissouros, head of research at JFD Group.
"It will be difficult to keep planning hikes in case the economy is hurt again, while... you cannot ignore inflation if it continues to skyrocket well above your objective." The domestically-focussed mid-cap index rose 0.7%.
Among stocks, global miner Anglo American jumped 1.5% after it said its production rose by 20% in the second quarter, driven by strong diamond and platinum output. EasyJet gained 1.7% after the British airline said it would fly 60% of its pre-pandemic capacity in the July-September period, a big jump from the 17% it flew in the previous quarter.
In dealmaking activity, U.S. group Apollo Global Management said it would not pursue a solo offer for Britain's supermarket chain Morrisons and was in talks to join the consortium led by Fortress Investment Group.
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